Actists Pty Ltd is a yoga/Pilates equipment wholesaler that sells to major yoga and Pilates studios across Australia, with 90% of their sales being credit sales. They have a 30-days payment term, with an allowance for doubtful debts of 2%.

(i) Explain how management's period assertion regarding completeness impact the control system needed when bad debt expenses are accounted for on the Income Statement. Your answer should refer to information quality goals. (2 marks)

(ii)Explain how management's period-end assertion regarding valuation and allocation impact the control system needed when account receivables (including allowance for doubtful debts) are reported on the Balance Sheet. Your answer should refer to information quality goals. (3 marks)

Answer rating: 100% (QA)

i Managements period assertion regarding completeness impacts the control system for bad debt expens... View the full answer